US September Challenger Job Cuts: Rising Trend Continues

Highlights

• September job cuts down 37% MoM, up 58% YoY.
• Tech sector leads 2023 job cuts with 151,989.
• Short-term outlook for workforce stability bearish.

U.S. Job Cuts: A Tale of Mixed Signals

September saw U.S.-based employers announcing 47,457 job cuts, a figure that’s down 37% from the 75,151 announced in August. While this might initially seem like a silver lining, diving into the numbers offers a less optimistic outlook, especially when considered on a year-over-year basis.

Unpacking the Numbers

Compared to the same month last year, September’s cuts are up by a staggering 58%. This increase paints a worrying picture of the U.S. labor market, signaling a softening in employment that’s more than just a blip. Furthermore, the third quarter alone saw 146,305 cuts, a massive 92% leap from the same period last year.

Looking at the yearly perspective, there’s been a 198% increase in planned job cuts through September 2023 compared to 2022. These alarming stats make it clear that we’re witnessing more than just monthly fluctuations; there’s a rising trend here that should make investors and policymakers sit up and take note.

The Sectors Under Fire

Diving deeper into the sectors reveals that Technology is leading the pack with 151,989 job cuts announced this year, a significant hike from last year’s 18,620. Retail and Health Care/Product manufacturers follow closely behind with 70,713 and 52,611 cuts, respectively. Financial firms are also feeling the pinch, announcing 43,675 cuts so far in 2023, marking a 194% increase from last year.

Behind the Cuts

What’s driving this uptick in job cuts? A myriad of factors, from economic conditions to inflation and rate increases, are at play. Business closures and bankruptcies have contributed to 94,515 and 31,651 cuts, respectively. Even technological advancements like Artificial Intelligence are adding to the workforce reduction, accounting for 3,997 cuts this year.

Short-Term Forecast

Given the mixed signals—decreasing month-over-month layoffs but sharply rising year-over-year figures—the short-term outlook on workforce stability leans bearish. Traders and investors should be wary of the underlying trends that are beginning to surface, which indicate that this might just be the tip of the iceberg.